CHETAN SURESH BHATT,RAIGAD vs. INCOME TAX OFFICER, WARD 1, PANVEL, VASHI

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ITA 1021/PUN/2026Status: DisposedITAT Pune17 August 2026AY 2013-20145 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) failed to consider the remand report of the AO and the assessee's rejoinder to it. Therefore, the matter was set aside for fresh adjudication by the CIT(A).

What were the facts?

The assessee did not file a return of income for AY 2013-14. The AO reopened the case under Section 147, issued a notice under Section 148, and treated the belatedly filed return as invalid. The AO made an addition of Rs. 1,25,46,000 on account of short-term capital gain from the sale of immovable property.

What were the issues?

Whether the CIT(A) erred by not considering the remand report and rejoinder, and whether the land in question qualifies as a capital asset under Section 2(14).

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 142(1),Section 144,Section 144B,Section 2(14),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI RAMA KANTA PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Ronak Jain
For Respondent: Shri Rajesh Haladkar, Addl.CIT

PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 01-12-2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2013-14. 2. Briefly stated, the facts of the case are that the assessee is an individual. For AY. 2013-14, the assessee did not file his return of income. Based on the information available with the Department, the Ld. Assessing Officer (“AO”) found that the assessee had made transactions of immovable property(ies) and consequently, the case of the assessee was reopened u/s. 147 of the Act and notice u/s. 148 of the Act, dt. 05-03-2020 was issued and served upon the assessee. In response to the said notice u/s. 148 of the Act, the assessee has filed return of income for the relevant AY. 2013- 14 on 19-02-2021 which was belated and hence treated as „invalid‟ by the Ld.AO. Subsequently, notice(s) u/s. 142(1) of the Act and a show cause notice issued and served upon by the assessee. However, being not 2 satisfied with the reply submitted by the assessee to the said notice(s), the Ld.AO proceeded to complete the assessment, determining the total income of the assessee at Rs. 1,27,09,180/- thereby making an addition of Rs. 1,25,46,000/- on account of short term capital gain as income from sale of immovable property, vide his order dt. 27-09-2021 passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act.

3.

Aggrieved, the assessee filed appeal before the Ld.CIT(A)/NFAC, who dismissed the appeal of the assessee by observing as under:

“Assessee's Submission The appellant contends that the lands situated at Mahadpoli and Degaon were rural agricultural lands outside the definition of "capital asset" under section 2(14). It is stated that the 7/12 extracts record crops such as Vari and Nagli; stamp duty was paid at agricultural valuation; no NA conversion had taken place; and a High Court-appointed administrator had supervised the company's agricultural operations on leased lands. The appellant submits that the Assessing Officer ignored the relevant documentary material and proceeded on the mistaken assumption that the involvement of a company rendered the land non-agricultural. On this basis, the appellant pleads that the addition of Rs 1,25,46,000 is unsustainable. Appellate Analysis and Adjudication: The grounds under this group call for examination of whether the appellant has discharged the burden of establishing that the lands sold constituted rural agricultural lands outside the ambit of "capital asset". On careful scrutiny of the assessment record, it emerges that the appellant has not furnished conclusive, contemporaneous, and independently verifiable evidence to demonstrate that the lands in question were used exclusively for agricultural purposes during the relevant period. The mere production of 7/12 extracts, lease documents, the distance certificate, and correspondence issued in connection with the administrator of Arrow Global Agrotech Ltd. is not enough to proove that the land was being used for agricultural purpose by the appellant. The appellant has not produced any evidence such as books of account, crop statements, irrigation records, or evidence of purchase of seeds, fertilizers etc. Furthermore, the assessing officer has recorded a fact in the assessment order that companies are not allowed to purchase agricultural land in Maharashtra. The Assessing Officer was therefore justified in drawing an adverse inference where the appellant failed to produce affirmative, contemporaneous evidence of agricultural operations. In these circumstances, and in the absence of satisfactory proof of rural agricultural status within the meaning of section 2(14), the addition made by the Assessing Officer on account of short-term capital gain cannot be faulted. Accordingly, Ground Nos. 1, 2 and 3 stand dismissed.”

4.

Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal:

3 “1. The leamed CIT(A) erred in law and on facts in sustaining the addition of ₹1,25,46,000/- as Short Term Capital Gain by completely ignoring and not dealing with the remand report submitted by the Assessing Officer, wherein all material facts necessary for adjudication under section 2(14) were expressly verified and accepted.

2.

The learned CIT(A) grossly erred in law in holding that the appellant failed to establish that the land sold was rural agricultural land, despite overwhelming documentary evidence including revenue records (7/12 extracts), stamp duty valuation, and distance certificates, all of which conclusively establish that the land was not a capital asset within the meaning of section 2(14).

3.

The learned CIT(A) erred in dismissing the ground relating to initiation of penalty u/s 271(1)(c) without appreciating that the assessment itself is unsustainable, the return was treated as invalid, and the issue involved is púrely interpretational, rendering penalty proceedings wholly untenable.

4.

The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.”

5.

We have heard the Ld. Representatives of the Parties and perused the material available on record. The Ld.AR submitted that during the appellate proceedings before the Ld.CIT(A)/NFAC, he called for a remand report from the Ld.AO. The assessee had filed his rejoinder to the said remand report (pg. 21-29 of the Paper Book refers). However, while adjudicating the assessee‟s appeal the Ld.CIT(A)/NFAC has not at all considered the remand report of the Ld.AO and the rejoinder filed by the assessee. He further submitted that the land in question is an agricultural land which falls outside the purview and definition of capital asset u/s. 2(14) of the Act. He submitted that the assessee in his rejoinder to the remand report, had raised this point/contention. However, the same has not been appreciated due to non-consideration of the remand report and assessee‟s rejoinder to the remand report by the Ld.CIT(A)/NFAC. He therefore, submitted that since the assessee has a strong case on merits, the matter may be set aside to the file of the Ld.CIT(A)/NFAC to decide afresh in light of the remand report of the Ld.AO and the rejoinder of the assessee.

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6.

The Ld.DR, on the other hand, objected to the above request of the Ld.AR and submitted that the impugned land in question is not an agricultural land. Relying on the decisions of - i) Gijo George vs. Deputy Commissioner of Income Tax [2026] 182 taxmann.com 816 (SC), Expat Projects and Developments Private Limited vs. The State of Maharashtra & Anr. in Criminal Appeal No. 811 of 2024 with Interim Application No. 21 of 2025 with Interim Application No. 1034 of 2025, dt. 11-11-2025 and Expat Projects and Developments Private Limited (Through its Authorised Representative Amit Kumar) vs. The State of Maharashtra & Anr. in Miscellaneous Application No. 1555 of 2023 in C.R.No. 31 of 2020, dt. 24- 06-2024 the Ld.DR submitted that the Ld.CIT(A)/NFAC rightly has confirmed the addition on account of short term capital gain from sale immovable property(ies) by the assessee since the assessee failed to produce cogent evidence to establish the agricultural character of the land.

7.

In rejoinder to the above contention of the Ld.DR, the Ld.AR submitted that during the remand proceedings, the Ld.AO himself verified the 7/12 extracts and accepted the classification of land as agricultural, recorded therein. This clearly indicates that the Revenue itself has accepted the agricultural character of the lands. Further, 7/12 extracts also record cultivation of agricultural crops of the said land. There is no material brought on record by the Revenue to suggest otherwise regarding the nature and use of the land not being agricultural. He further submitted that in addition to the above details/documents, the assessee has also submitted a Distance Certificate issued by the Public Works Department that conclusively establishes that the impugned lands were situated beyond the statutory limit prescribed u/s. 2(14) of the Act.

5

8.

Undisputedly, the Ld.CIT(A)/NFAC had called for a remand report from the Ld.AO to which the assessee also submitted his rejoinder which was available before the Ld.CIT(A)/NFAC at the time of passing the impugned order. However, from the perusal of the Ld.CIT(A)/NFAC‟s order, we observe that his order is completely silent on the remand report of the Ld.AO and the rejoinder filed by the assessee. Considering the totality of facts and in the circumstances enumerated above, we deem it fit to set aside the impugned order of the Ld.CIT(A)/NFAC for denovo adjudication on merits and as per fact and in law, after considering the remand report of the Ld.AO and the rejoinder filed by the assessee. Ground Nos. 1 & 2 raised by the assessee are accordingly treated as partly allowed for statistical purposes. Ground No. 3 relates to initiation of penalty proceedings u/s. 271(1)(c) of the Act which is dismissed being premature in nature at this stage.

9.

In the result, the appeal filed by the assessee is treated as partly allowed for statistical purposes.

Order pronounced in the open Court on 17-08-2026 (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 17-08-2026 Tadepalli Naga Naga Murali Mohan TNMM Murali Mohan Date: 2026.08.18 10:55:02 +05'30'

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent

3.

The concerned Pr.CIT, Pune

4.

DR, ITAT, „A‟ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, ////

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